But what is actually money? …And inflation?
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The “monetary economy” is the most absurd component of the capitalistic system. Commonly we think that money is a sort of measurement unit, suitable to express the value of a good or service. No!
1) Money is just an artificial number, which doesn’t exist in nature and reflects nothing in nature.
2) Money is not a measurement unit, because it looses worth with time (inflation). Measurement units are constant per definition, they don’t decrease their worth with the time. 1 meter will be always 1 meter long. 1 Kg will weight 1Kg even in 1000 years.
What could 1$ buy in 1913, and what today? US Dollar has lost 96% of its buying power in 94 years (from 1913 to 2007), and it will decrease for ever, as well all currencies do with time.
To understand how the money is disconnected from the reality of things, let’s make a comparison with a real unit measure. Let’s suppose that you have an iron stab which is exactly 1 meter long (100cm). After 1 year you measure it again, but in the meantime the meter band has stretched a bit, by alone. You lay the meter band beside the iron stab and now it measures for example 98cm. But the iron stab is always long the same! Only the meter band has become a bit “longer”.
Then what you do now, to follow the rules of the system? You go to a mine, you extract some new iron metal, you melt it and you add it to one top of the stab. Now the stab matches the new “1 meter” unit but is actually 1,02 meter long! So mad is the monetary system with its inflation mechanism. Every year more raw resources are dragged from the environment just to follow the infinite loss of value of currencies.
The documentary “Zeitgeist Addendum” (2008, by Peter Joseph) explains very well the perverse mechanism of inflation and the monetary system:
(Note: I don’t agree in part, or even at all, with some other parts of the documentary, specially the part about criminality)
Cripto currencies (like Bitcoins) are useless as well. They are artificial numbers and they change their value with time too. They are merely created and issued in a different way. They are no measure units.
And not… The solution is not to bound again the money to physical gold. It has no sense. Gold is just a metal and exists in a very limited quantity in nature. It is not any sort of measurement unit. Let’s use gold for more proper uses (in technology for example).
The price in money of an object is not a number which reflects the effective work that the object contains. The price in money says nothing about the effective amount of efforts which are contained in a product, starting from the hard work of the poor miners somewhere in the world, to the low-pay workers in the factories, to the people who carry it to you or to the shop.
If the price would reflect the real proportions of all its components, everything would be much more expensive and you would not throw it away so easy.
But now the most interesting part. Money looses its worth (buying power) with time, because of the… INFLATION! And we are accustomed to assume that it is a natural fact. No! It isn’t!
Inflation is the result of the most perverse invention of the monetary economy, the concept of ‘INTERESTS’.
The interests on money are a mathematical freak.
As you know, only banks are allowed to create and issue money (central banks). This automatically means that it is not possible to return to banks, more money than how much they have already issued in the system.
Therefore, money should never be loaned under the condition of interests, because this generates the endless loop of the inflation.
Short explained:
If you get borrowed 100 tomatoes from someone and you have to give back 110 tomatoes, you can take the 100+10 tomatoes from the tomatoes which you produce in your garden, and everything would be fine.
But if you get 100$ loaned by a bank or a friend, and you have to give back 100+10$ of interests….where do you take the additional 10$ from, if only banks can print money?
These 10$ have to be issued in someway by the bank again! It doesn’t matter how these +10$ land in your pocket. They can come originally only from the bank.
To make it more clear, assume as starting condition there is only one bank (as it was at the very beginning of the system). The bank has printed and owns initially only 100$. The bank loans 100$ to you, with 10% interest. Soon or later the bank will have to print also these +10$ of interests and “inflate” them in the system, or you will never be able to pay your entire debt back!
The effect is that in any moment, in the system there is less money than how much is needed to pay all the existing interests. This is why there is always some people who are not able to pay and end insolvent.
It is like the game of the ‘musical chairs’: the players dance and they have to sit on chairs when the music stops. While they are dancing, one chair is taken away, therefore each time when the music stops, one dancer will remain without a chair where to sit down.
The banks have to “inflate” continuously new money in the system (cash or just numbers), to keep the vicious loop alive, in order to let the people can pay their interests. But more money is present in the system, more the money looses its worth…. This is why inflation exists, because money is not a fixed value. It is not a measure unit.
This is why the great ‘economists’ snivel every time when the inflation rate decreases, and why the deflation is their worst nightmare!
But again, the basic concept is that to the banks can’t return back more money than how much they have already issued. And… money can’t generate money!
For Spanish or Italian speakers there is this excellent scene from the Spanish movie “Concursante” (The Contestant), 2007, by the director Rodrigo Cortés. It explains very well this mechanism. After many years, I can find no more the video with English subtitles. If someone find it, please let me konow:
(Low quality, Spanish with Italian subtitles)
(HD, Spanish only)
This is why every year we have to produce and consume 2-2,5% goods and resources more than the year before. It is only to cover that % coming from money devaluation, due to the inflation. Only a mathematical number, inexistent in nature!
This is why “Life becomes always more expensive“. People assume that it is a natural process, but it isn’t. I answer always “Nothing becomes really more expensive. Money looses its value!”.
An object becomes more expensive only if and when it is required more work to produce it, and it is not the case for the most of products.
So, this is why people are slavered to work 11,5 months per year for their entire working life, just to move money, to feed the infinite loop of inflation, interests and growth.
Then I have really enough about this story. I can no more hear that a problem can’t be fixed or something can’t be done, because there are no money. Money are an artificial problem, then find an artificial solution. If there is the need to build a hospital, just build it! There is no shortage of bricks, materials, there is no shortage of masons and doctors.
Don’t tell me that it is not possible to build a hospital or do something, because there is only shortage of money!! The laws of nature doesn’t care at all about your problems of money!
I can no more stand to hear daily on the TV news, that the ‘Economists’ cry because “…In the last month the inflation rate has decreased and therefore the consumers are shopping less”. Incredible! If the people postpone their unnecessary purchases, it is toxic for the whole system!! The world is going bad because of this! This is really the apotheosis of the madness of the capitalistic system. Deflation is the worst nightmare of the economists.
I have really enough to hear that the everything is ‘going bad’ because “…The Gross Domestic Product has decreased of x%”, “…The GDP has increased less than expected”, “The Growth was less than expected”… I have enough of this crap everyday… fuck the monetary Economy, and all the “economists” of the world! And fuck also the numbers of the GDP!
The GDP says nothing about the real quality of life of people. And it says nothing about whether what was produced was necessary or not, or harmful or not!
But by the way… how should a non capitalistic System work? How would a more effective measurement unit work? Take a look in the section ‘Non-capitalistic System‘.